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18 Sep 2008 07:00
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HAMBLEDON MINING PLC
Interim Results to 30 June 2008
Hambledon Mining Plc ("Hambledon" or the "Company"), the AIM listed gold mining company based in Kazakhstan, announces today its interim results for the six months to 30 June 2008.
Highlights:
- Initial production of gold dorΓ© from Sekisovskoye
- Placing in May raised Β£2.77m before expenses
- Interim loss Β£3.4m (loss 6 months to 30 June 2007 Β£1.0m; loss for year to 31 December 2007 Β£4.4m)
Enquiries:
Hambledon Mining: Telephone +44 (0)20 7233 1462
Charles Zorab
FairfaxΒ I.S.Β PLC: TelephoneΒ +44 (0)207 598 5368
Nominated Adviser and Broker
Ewan Leggat
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders for the 6 months to 30 June 2008.
The period under review was overshadowed by the boiler accident which occurred in February. This resulted in a shutdown of operations for approximately ten weeks. During this period, safety consultants undertook a complete review of the process plant, a replacement boiler was purchased and installed and additional staff training took place. Inevitably, this involved considerable extra costs for the Company at a time when there was no revenue and contributed significantly to the interim loss to end June 2008 of Β£3.4m (lossΒ Β£1.0m 6 months to end June 2007;Β loss Β£4.4m for 12 months to end December 2007).Β
Since production re-commenced in late April, there have been a number of teething problems which have slowed theΒ Company's progress towards full, targetedΒ production. TheseΒ problemsΒ have been and are being addressed.Β Confidence in your Company was displayed in May this year when Β£2.77mΒ grossΒ was raised in aΒ privateΒ shareΒ placingΒ toΒ institutionalΒ investors.Β
We areΒ makingΒ progressΒ inΒ the second halfΒ of 2008Β towardsΒ our initial annualised productionΒ targetΒ of 40,000 ounces of gold. By the end of the year, equipment will have been ordered for the commencement of the underground operations at Sekisovskoye which will open up an exciting new development for the Company.
Β I would like to thank all stakeholders in the Company for their perseverance and support in what has been an exceptionally difficult period.
George Eccles
17Β September 2008Β
-------------------------------------------------------------------------------------------------------
REVIEW OF OPERATIONS
SEKISOVSKOYE
Start Up
TheΒ process plant was startedΒ in December 2007Β and experiencedΒ minor teething problemsΒ that areΒ commonΒ in a commissioning process. To begin with, the two main ball mills had to be shut down as a result of overheating of the discharge end bearings due to slight misalignment. There were also some problemsΒ with theΒ crusher.Β
Then in February, there was a tragic explosion of the elution boiler in the desorption circuit resulting in one fatality. The plant was stopped immediately while the cause of the accident was thoroughly investigated.Β Damage to other parts of the plant wasΒ limited.
Boiler consultantsΒ were employed to oversee theΒ design, specification andΒ installation of the new boilerΒ and associated equipment. This was sourced fromΒ RussiaΒ and installed in April.Β During the shutdown, a complete safety review of the plant wasΒ undertaken by specialist consultants and further training inΒ safety proceduresΒ was given to Company staff.Β Throughout this period, a full workforce was maintained to ensure availability of sufficient staff onceΒ production re-commenced. Mining operations were suspended until early May as a build up of stockpiled ore was already on hand.Β
At the time of restarting operations, it was believed that the problems in the crushing circuit had been rectified. This was premature and in fact they continued longer than expected,Β partlyΒ due toΒ the presence of some clay-like materialΒ in the near-surface oreΒ whichΒ was causing blockages, and partly due toΒ inadequacies inΒ the crushing circuit itself.Β The decision was made to crush to only 20mm size instead of the planned 12mm.Β Notwithstanding this oversize material, the ball-mills have proven capable of milling to the required particle sizeΒ at the design throughput rate. The crushing circuit itself will be improved shortly by the addition of aΒ fourthΒ cone crusher which will enable all material to be crushed to 12mm, whereupon it is expected that the crushing and milling sections will be capable of higher thanΒ anticipatedΒ throughput. The Falcon concentrator was commissioned in the second week of June and the second tailings dam was commissioned in September 2008.
Recovery rates are currently lower than expected from the plant and, having resolvedΒ the crushing and milling circuitΒ problems,Β changes are already being implemented that should improve recovery rates significantly.
Β Consideration is being given to the addition of a seventh leach tank, for which space and foundations have already been made in the existing building,Β which wouldΒ provide further leaching capacity to match the anticipated increase in output from the crusher and mills.
Underground
The Company has completed a preliminary study into the feasibility of underground mining, using the resource model compiled by the Company's independent geological consultants and design inputs from AMC Consultants.
The study was carried out onΒ the largest 34 ore bodies contained inΒ only a smallΒ part of the overall underground resourceΒ for which adequateΒ dataΒ existsΒ toΒ facilitateΒ Β mine planning.Β Although a detailed reserve has not yet been formalised, the study indicated that within the limited zones studied,Β an estimated 2.9 million tonnes could be mined at a diluted grade of 4.7 grammes per tonne. Within the open pit zones,Β an uplift in grades of around 20% has been experienced compared with former Soviet exploration results and it is likely that a similar uplift will be obtained underground, giving a diluted grade of between 5 and 6 grammes per tonne.Β Based on the Soviet grades, thisΒ gives a total contained gold of aboutΒ 430,000 ounces.Β Mine planning for the large amounts of inferred resource not covered by the study will be carried out after further drilling has been carried out. Output from underground is likely to be in the region of 500,000 tonnes per annum, giving a mine life of some 6 years from these initial zones.Β
The CompanyΒ plans to start mining from undergroundΒ in partial substitution for open pitΒ productionΒ as soon as possible. OreΒ from undergroundΒ is similar in character to open pit ore andΒ will be treated in the same process plant. Owing to its higher grade,Β thisΒ will result in a significant increase in gold output. WeΒ expect to order the first equipment for underground operations by the end of this year.Β The initial cash outlay is likely to be of the order of $3m, which will be financed internally and, if necessary,Β withΒ debt.Β Full development of the underground mine is likely to involve aΒ capital costΒ of some $17m, though this will be undertaken in stages and isΒ alsoΒ likely to be financed from retained profits and,Β if necessary, debt finance.
Exploration
Work continues on both our licence areas amounting to some 21 square kilometres, and on the acquisition of new licence areas.
Ognevka
Lower than anticipated recoveries from the treatment of the zinc clinkerΒ haveΒ notΒ beenΒ resolved. The Company is currentlyΒ undertakingΒ testΒ programmes into howΒ recoveries may be improved and,Β separately,Β into the treatment of the large resource of pegmatiteΒ tailings,Β of which 1.6 million tonnes is owned by the Company.Β It has been decided that, with limited resources, development work at Ognevka shouldΒ be limited until a more substantial cash reserve has been accumulated. None the less, Ognevka represents a significant opportunity we look forward to exploiting in due course.
Corporate
21,269,614Β new ordinaryΒ shares were placedΒ in May 2008,Β mainly toΒ financialΒ institutions,Β raising Β£2.77mΒ before expenses, to provide working capital during the shutdown and restart of operations.
At the Annual General Meeting in July, new article of association were adopted which brings them into line with changes introduced in the Companies Act 2006.
In addition to his other responsibilities, Neil Stevenson has become director in charge of mine and plant safety. Neil has been approved as having the qualifications and knowledge to carry out this function by the appropriate departments inΒ KazakhstanΒ responsible for emergencies and industrial safety.
Six monthsΒ ended 30 June 2008
|
Six months to |
Six months to |
Year endedΒ |
||
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Note |
Β£000 |
Β£000 |
Β£000 |
|
|
Revenue |
828Β |
-Β |
-Β |
|
|
Cost of sales |
(2,453) |
-Β |
-Β |
|
|
Β |
Β |
Β |
||
|
Gross loss |
(1Β ,625) |
-Β |
-Β |
|
|
Administrative expenses |
Β (1,686) |
(846) |
(4,150) |
|
|
Other operating expenses: |
||||
|
Impairment of intangible assets |
-Β |
(174) |
(227) |
|
|
Β |
Β |
Β |
||
|
Operating loss |
(3Β ,311) |
(1Β ,020) |
(4,377) |
|
|
Investment revenues |
24Β |
165Β |
222Β |
|
|
Other gains and losses |
(77) |
(88) |
(42) |
|
|
Finance costs |
Β (51) |
(51) |
(186) |
|
|
Β |
Β |
Β |
||
|
Loss on ordinary activities |
(3Β ,415) |
(994) |
(4,383) |
|
|
Income tax expense |
(10) |
-Β |
-Β |
|
|
Β |
Β |
Β |
||
|
Loss on ordinary activities attributableΒ toΒ equity shareholders |
||||
|
3 |
Β (3,425) |
(994) |
(4,383) |
|
|
Loss per ordinary share |
||||
|
Basic |
4 |
(0.76)p |
(0.24)p |
(1.04)p |
|
Diluted |
4 |
(0.76)p |
(0.24)p |
(1.04)p |
Condensed group statement ofΒ recognised income and expense
Six months ended 30 June 2008Β
|
Six months to |
Six months to |
Year endedΒ |
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
Β£000 |
Β£000 |
Β£000 |
|
|
Currency translation differences on foreign |
|||
|
currency net investments |
(28) |
263Β |
(15) |
|
Net (loss) / income recognized
directly in equity |
(28) |
263Β |
(15) |
|
Loss for the financial period |
(3,425) |
(994) |
(4,383) |
|
Β |
Β |
Β |
|
|
Total recognised expense for the financialΒ periodΒ attributable to equity shareholders |
(3,453) |
(731) |
(4,398) |
Condensed groupΒ balance sheet
30 June 2008
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Β |
Β£000 |
Β£000 |
Β£000 |
|
|
Non-current assets |
||||
|
Property, plant and equipment |
17,995Β |
16,229Β |
17,424Β |
|
|
Current assets |
||||
|
Inventories |
2,335Β |
922Β |
2,395Β |
|
|
Trade and other receivables |
1,559Β |
1,304Β |
822Β |
|
|
Cash and cash equivalents |
1,717Β |
5,977Β |
3,176Β |
|
|
5,611 |
8,203Β |
6,393Β |
||
|
Total assets |
23,606Β |
24,432Β |
23,817Β |
|
|
Current liabilities |
||||
|
Trade and other payables |
(1,121) |
(1,632) |
(723) |
|
|
Provisions |
(117) |
(117) |
(117) |
|
|
(1,238) |
(1,749) |
(840) |
||
|
Net current assets |
4,373 |
6,454Β |
5,553Β |
|
|
Non-current liabilities |
||||
|
Trade and other payables |
(575) |
(536) |
(453) |
|
|
Provisions |
(825) |
(717) |
(774) |
|
|
(1,400) |
(1,253) |
(1,227) |
||
|
Total liabilities |
(2,638) |
(3,002) |
(2,067) |
|
|
Net assets |
20,968Β |
21,430Β |
21,750Β |
|
|
Equity |
||||
|
Called-up share capital |
469Β |
424Β |
448Β |
|
|
Share premium account |
31,317Β |
24,777Β |
28,707Β |
|
|
Merger reserve |
(148) |
(148) |
(148) |
|
|
Accumulated losses |
(10,670) |
(3,623) |
(7,257) |
|
|
Total equity |
20,968Β |
21,430Β |
21,750Β |
|
Condensed group cash flow statement
Six months ended 30 June 2008
|
Six months to |
Six months to |
Year endedΒ |
||
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Β |
Β£000 |
Β£000 |
Β£000 |
|
|
Net cash outflow from |
||||
|
operating activities |
(3,064) |
(1,048) |
(5,387) |
|
|
Cash flows from investing activities |
||||
|
Interest received |
26Β |
160Β |
222Β |
|
|
Purchase of intangible exploration assets |
-Β |
(22) |
(75) |
|
|
Purchase of property, plant and equipment |
(1,050) |
(4,987) |
(7,705) |
|
|
Net cash used in investing activities |
(1,024) |
(4,849) |
(7,558) |
|
|
Cash flows from financing activities |
||||
|
Proceeds from issue of share capital |
2,631Β |
8,145Β |
12,099Β |
|
|
Interest paid |
-Β |
(6) |
(18) |
|
|
Repayment of related party loan |
-Β |
(290) |
(290) |
|
|
Net cash inflow from financing activities |
2,631Β |
7,849Β |
11,791Β |
|
|
Net (decrease) / increase in cash andΒ |
Β |
Β |
Β |
|
|
cash equivalents |
(1,457) |
1,952Β |
(1,154) |
|
|
Cash and cash equivalents |
||||
|
at beginning of the period |
3,176Β |
4,352Β |
4,352Β |
|
|
Effect of foreign exchange rate changes |
(2) |
(327) |
(22) |
|
|
Cash and cash equivalents at endΒ |
Β |
Β |
Β |
|
|
of the period |
1,717Β |
5,977Β |
3,176Β |
|
Notes to theΒ interimΒ condensed groupΒ financial statements
Six months ended 30 June 2008
Β
1. General information
These interim groupΒ financial statements are for the six months ended 30 June 2008Β and are unaudited. The information forΒ the year ended 31 December 2007Β does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.
The financial information forΒ the year ended 31 December 2007Β has been extracted from the statutory accounts of Hambledon Mining plc ("the Group") for that yearΒ that were prepared under United Kingdom Law and International Financial Reporting Standards (IFRS) adopted by use by the European Union. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section 237(2) or (3)Β of the Companies Act 1985.
Β
2. Accounting policies
The interim group financial statements have been prepared using the accounting policies set out in the statutory accounts for Hambledon Mining plc for the year ended 31 December 2007. These accounting policies comply with International Financial Reporting Standards (IFRS) adopted by use by the European Union
3. Dividend
The directors do not recommend the payment of a dividend.
4. Loss perΒ ordinaryΒ share
The calculation of basic and diluted earnings per share is based uponΒ the retained loss for the financial period.
The weighted averageΒ number of ordinary sharesΒ for calculating the basic loss per share and diluted loss per share after adjusting for the effects of all dilutive potential ordinary shares are as follows:
|
Six months to |
Six months to |
Year endedΒ |
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
Basic and diluted |
452,Β 737,Β 597Β |
414Β ,005Β ,611Β |
442Β ,403 465Β |
5. Approval of interimΒ groupΒ financial statements
The interim group financial statementsΒ for the six months to 30 JuneΒ 2008Β were approved by the Directors on 17 September 2008.
Β
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